A substantial surge in applications to establish Right To Manage (RTM) and flat management companies has been attributed to soaring service charges for leasehold flat owners, recent research from Direct Line unveils.
Service charges, encompassing various expenses for maintenance, repair, and management of buildings and communal areas, have witnessed a staggering increase. With prices escalating across the economy, many flat owners, including landlords, have endured a steep 10% annual rise in charges, with approximately one in 14 experiencing hikes exceeding 21%.
This surge translates into an average service charge bill of £1,580 per year, with a notable one in five owners shelling out over £2,000 annually. Notably, landlords in Greater London bear the brunt, with an average service charge of £1,994—surpassing the median monthly rent in the capital. These landlords have witnessed an 11% upsurge in charges over the past two years.
RTM and flat management companies offer leaseholders the opportunity to assume control of their building’s management from the freeholder, pooling resources with neighbouring leaseholders.
According to research by Direct Line business insurance, nearly two-thirds (60%) of leasehold landlords in England and Wales are contemplating establishing an RTM or flat management company to oversee the management of their property’s building. Additionally, almost one in five (17%) expressed willingness to join such a venture if initiated by someone else in their building.
Sarah Casey, Landlord Product Manager at Direct Line business insurance, commented on the trend: “Rising mortgage rates and steep increases in service charges have placed landlords under considerable pressure in recent months. Consequently, it is unsurprising to witness a surge in flat owners collaborating with fellow leaseholders to establish Right to Manage companies. By seizing control of their block’s management, landlords can exert greater influence over maintenance decisions, timing, and costs.”